Incentives give April home sales big boost

WASHINGTON — Homebuyers rushed to take advantage of government incentives and low mortgage rates in April, giving the housing market its biggest boost in five months.

THE ASSOCIATED PRESS

WASHINGTON — Homebuyers rushed to take advantage of government incentives and low mortgage rates in April, giving the housing market its biggest boost in five months.

But now that a homebuyer tax credit has expired, growth in the second half of the year will depend on the lure of historically low mortgage rates and the strength of the economic recovery.

Some economists say mortgage rates alone won't be enough to propel the market.

"Although mortgage rates have fallen sharply, the combination of high unemployment, heavy indebtedness and tight credit suggest to us that demand will stumble," said Paul Dales, an economist at Capital Economics.

Sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said yesterday.

The increase in sales sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago.

Mortgage rates fell last week to the lowest level for the year and close to 50-year lows as worries over the European debt crisis sent investors rushing into the safety of U.S. credit markets.

The tax credit's impact is expected to linger for a couple months. While homeowners had to have a signed sales contract by April 30, buyers have until the end of June to complete their sales. The federal government provided offered first-time buyers a tax credit of up to $8,000. Homeowners looking to upgrade were able to qualify for a credit of up to $6,500.

Sales were up in all parts of the country except the West. The gains were led by a 21.1 percent jump in the Northeast and a 9.9 percent rise in the Midwest. Sales also rose 8.6 percent in the South.

The only region of the country that saw sales decline was the West, where sales dropped by 6.2 percent from March.

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